Deliverable 5 - Effectively Managing Change

Organizational Change

There are many internal and external causes that drive organizational change. External factors that influence change are political and legal factors, market conditions, technology, and social changes. Internal factors that can impact change are management changes, employee changes, structure deficiencies, and necessary culture changes

External Reasons for Change

Political and legal changes, both domestic and international, have an important influence on businesses. When laws are passed to regulate the activities of the business industry, this is an example of a legal/political external factor that will impact a business and cause it to make internal changes.

Market conditions are another external factor that cause a need for change. These market conditions include economic inflation (deflation) rate, fluctuation in the interest rates, economic recession, changes in the economic policies or taxation, import/export duties, changes in the oil prices, financial stability of the country or changes in consumer confidence in the economic conditions of the country.

Technology is another external factor that creates a reason for organizational change. The speed of technological change is dizzying, and technological changes can impact the nature of jobs at all organizational levels. Automation has also made a significant impact on the functioning of organizations. Technological advancements and innovations in communication and computer technology have transformed the organizational environment by facilitating newer ways of working thus creating a need for developing a framework for managing this change effectively.

Changes in what a society values can also greatly affect a business. These changing values can be seen today with the new focus on natural products with few ingredients, natural healthcare products, and electric cars. Social changes are happening often and quickly today because of the increased availability of information from the internet and social media. Another one of those changes is the push for social equity. This includes equal opportunity and pay for people of different races, genders, sexual orientations, etc. These new expectations have opened doors for opportunity to improve and for creation of new policies and programs within organizations. Organizational management has to follow social norms in shaping its employment, marketing, and other policies.

Political/Legal

The political environment creates regulatory parameters and laws within which an organization must operate. Tax policies, trade and trade regulations, and minimum wage legislation are just a few examples of political and legal issues that may impact the way an organization operates.

Social/Sociocultural

The social environment is very important because it determines the goods, services, and standards that society values. Some examples include: the changing demand to know what is in our food and for organic products. Now organic products are almost as common in supermarkets as non-organic. The demand for gender equality and how that relates to pay. Organizations are starting to make changes to align male and female pay for comparable jobs.

Technology

The external technological environment impacts the processes and inputs used in changing inputs (resources, labor, money) to outputs (goods and services). The success of many organizations depends on how well they identify and response to external technological changes. One of the most significant technological changes of the past few decades has been increasing availability and affordability of management information systems (mis). These systems allow managers the ability to have access to information that can improve the way they operate and manage their business.

Economy/Market conditions

The economic external environment reflects the financial condition of the world. Certain economic conditions of special concern to organizations include interest rates, inflation, unemployment rates, gross national product, and the value of the u.s. dollar against other currencies. A favorable economic climate typically means more opportunity for growth in many non-necessity industries like clothing, jewelery, and new cars. But some industries do better in poor economic conditions like education, alcoholic beverage, and low cost food/retail industries.

Internal Reasons for Change

Sometimes pressure for change arises for internal reasons, also. Internal factors that can impact the need for change include management changes, employee changes, structure deficiencies, and necessary culture changes.

The reason why management changes cause the need for organizational changes is because each manager brings his or her own ideas and way of working. Changes in the organizations can happen fast when new senior executives take over. The new executive will follow their own plan and agenda and will likely put into practice his own ideas and philosophy. This may lead to very impactful changes in the organization including; organization design, team and individual goals and expectations, the delegation of authority, and much more.

The workforce is changing fast, and this change to the profile and demographic of the average employee is another internal force that causes a need for change. The newest generation of employees have better educational qualifications, place greater emphasis on human values and are questioning the status quo of the corporate culture. Their behavior (like all previous generations of employees) is complex and necessitates change in the organization to be able to meet their needs and wants.

Changes may also be needed to fix problems caused by the organizational structure. These problems could include an unmanageable span of control, too many managerial levels, a lack of coordination among departments, obstacles in communication, overabundance of committees, a lack of transparency in policy decisions, and a lack of cooperation between line and staff employees. However, the need for change in these instances often goes unrecognized until some major crisis occurs.

These are just some of the ways that internal and external factors drive the need for organizational change.